Goldman Sachs has traditionally functioned like a run-of-the-mill investment bank. Minimums to open an account were in the range of $10 million, and returns were not guaranteed.
While that will still remain true for the firm’s wealth management arm, Goldman is opening its doors to the masses with the launch of GS Bank, an FDIC-insured, Internet-based savings bank.
And just what do we mean by the masses? Well, anyone with an Internet connection and a dollar — because that is what each account’s minimum balance will be.
GS Bank’s interest rates will be high, giving customers an annual yield of 1.05 percent. This rate trumps the average U.S. saving’s bank yield of .06 percent APY, but is relatively in line with other online rival banks like Ally, which offers 1 percent APY.
Deposit yields from online banks are traditionally much higher than traditional banks, mainly because of the cost savings that come from not having to support brick-and-mortar branches.
The bank was born out of Goldman’s acquisition of GE Capital Bank, the online retail bank previously run by General Electric’s capital arm.
The launch of GS Bank and acquisition of GE Capital Bank is a move by Goldman to diversify revenue streams and strengthen liquidity in a market where traditional investment banking isn’t doing as well as it has in the past.
Currently, GS Bank has total deposits of around $114 billion, which pales in comparison to the total deposits of large consumer banks like Wells Fargo and Bank of America.